An Adelaide cryptocurrency hedge fund is seeking to raise $10 million from investors
AN Adelaide-based fund is hoping to raise $10 million from investors in what it claims is Australia’s first retail cryptocurrency hedge fund.
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AN Adelaide-based fund is hoping to raise $10 million from investors in what it claims is Australia’s first retail cryptocurrency hedge fund.
Every Capital plans to launch the ASIC-regulated managed fund in the third quarter of this year, and expects to deliver annual returns of 20-40 per cent to investors.
As well as Bitcoin, the company will invest in a range of altcoins (alternative coins to Bitcoin) and ICOs (initial coin offerings).
Cryptocurrencies are notoriously volatile, with Bitcoin currently trading at around $9000 after peaking at close to $25,000 in December.
However, Every Capital director Tom Surman - a partner with Adelaide accounting firm Accodex - said volatility would be managed through derivatives such as Bitcoin futures and staple coins, which are pegged to currencies or commodities such as gold.
“I had been approached by clients looking to make an investment in cryptocurrency - there has been a lot of hype about the potential to make significant gains with small amounts of initial capital,” he said.
“A lot of these clients had never invested in shares or traditional investments before and I was concerned because crypto is a largely unregulated market - very volatile and difficult to navigate safely.
“We elected to go down the hedge fund path - it costs a bit more in terms of licensing and disclosures but it means we can manage the downside.”
Mr Surman has partnered with Sydney-based PwC partner Aaron LePoidevin, San Francisco-based designer Devin Mancuso, Adelaide-based blockchain expert Ben Longstaff and communications specialist Jack Baldwin to launch the fund.
An investment mandate is being developed in conjunction with Singapore cryptoasset manager Astronaut Capital, and a minium of investment of $2500 will apply.
The fund will be administered by alternative asset manager Global Merces.
“We’re proud to be one of the first retail funds that makes cryptoassets and blockchain technology available as a cutting-edge investment for every Australian, and proud to be doing it in Adelaide,” Mr Surman said.
“Our whole team is either based in Adelaide or came from Adelaide originally, so we wanted to base it here.”
Mr Surman said strategic investment partners were being sought to raise $500,000 for licensing and other upfront costs.
He said while there were a “handful” of wholesale crypto funds active in Australia, the retail market was currently underserved.
“A lot of seasoned investors are looking for ways to diversify their investment portfolios and cryptocurrencies don’t really track with any existing asset classes, so they dovetail nicely and may offer potential upside,” he said.
“Being a really immature market it’s super volatile - you can potentially make huge gains but you can make big losses as well.
“It’s a high risk investment - we obviously explain that to investors. The way I look at it is it should be an investment made in context of your broader investment portfolio.”